Chile earthquake rattles wine industry as millions of bottles' worth is lost
Thursday, March 4, 2010
SANTIAGO, CHILE -- The massive earthquake that struck Chile on Saturday caused hundreds of millions of dollars in damage to one of the world's most popular wine industries, sending rivers of merlot and cabernet sauvignon pouring from cracked barrels and vast storage tanks onto warehouse floors.
"That was hard to watch," said Pablo Morande Jr., who said he looked on as 2 1/2 million liters of wine sloshed into the ground at his vineyard in Chile's battered wine country.
Vintners and analysts of an industry that is the fourth-leading wine exporter to the United States after Italy, France and Australia estimated that at least 150 million bottles' worth of wine, and perhaps much more, was destroyed in the 8.8-magnitude tremor, which killed more than 800 people.
René Merino, president of Wines of Chile, the national association, said that at current retail prices in the United States, the loss was worth $975 million in spilled wine alone.
The full extent of the damage to the industry, which has annual sales of about $1.3 billion, is only now coming into focus as wine producers take stock of their losses. Some industry officials played down the damage, saying there would be little long-term effect on price or supply.
Officials from Chile's biggest producers, representing 95 percent of the industry, met Wednesday and concluded that the earthquake's effects on business were not as bad as initially feared. Merino, who led the meeting, said about 12.5 percent of the country's cellared wine was lost.
But others said perhaps 20 percent or more of the Chilean industry's stored wine was destroyed, which could create serious problems for Chilean exports in the coming months.
"Many wineries that lost 80 percent of their production are publicly saying just 15 percent was lost," said one wine executive who spoke on condition of anonymity, citing the fear that distributors would cut off wineries thought to be most heavily damaged by the quake. "This is an incredibly touchy subject."
About 70 percent of Chilean production takes place in areas badly affected by the quake, including the Maule, Colchagua and Cachapoal valleys, all key areas for Chilean wine production.
Much of the damage came when massive storage tanks, stainless steel vats more than 15 feet high, toppled. Violent shaking snapped tank legs bolted to the ground, knocking the vats over and causing a domino effect as tank after tank crashed to the ground. Wine stored in barrels was also lost as the barrels rolled off racks, cracked open or popped the seal, flooding warehouses.
Winemakers who have visited the region said the damage extended far beyond finished wine. The quake also caused massive damage to infrastructure ranging from cracked underground irrigation tubing to collapsed warehouses. They said the damage has left major questions about the entire 2010 harvest and exports.
Although wine represents just 1 percent of Chile's exports, the wine industry employs 80,000 full-time workers. In Chile's central valley, wine is an important source of employment for thousands of temporary fruit pickers who flood the region every March. With roads and worker housing destroyed in the quake, the fate of this year's harvest is unclear.